Mortgage

“Whole-tail” lenders: The entire premise of BRAWL is flawed

Say bad rep coming from vocal minority giving incorrect details

Earlier this year, a group of mortgage brokers started an initiative against certain wholesale lenders, calling out their practices, but one of those lenders is fighting back against those claims.

The group of mortgage brokers called themselves BRAWL, or Brokers Rallying Against Whole-tail Lending. They made a list of good and bad wholesale lenders, even naming names of the “bad” lenders.

BRAWL introduced itself to the industry a couple weeks ago, and was a topic of a lot of discussion at NAMB National, a well-attended conference by brokers nationwide. The movement claims it has received an overwhelmingly positive response from brokers and lenders.

Look no further than HousingWire’s comment boards on the story to see the topic has certainly generated a significant response from the housing industry.

A couple weeks ago, Mat Ishbia, president and CEO of United Wholesale Mortgage, one of the “good ones,” shared his thoughts on what the movement means for the space and why they support it.

In a nutshell, BRAWL is fighting back against wholesale lenders that steal clients from brokers by cross selling to borrowers through their own retail channel.

DELIVERING BOTH SIDES OF THE STORY

HousingWire previously explained we are talking to wholesale lenders on both sides of the fence to get their perspective on the movement that’s disrupting the space. As promised, below is the other side to this perspective given by UWM.

One lender is stepping forward to defend its practices against BRAWL, saying their business practices are both ethical and compliant.

“At loanDepot, we have multiple policies and procedures in place to ensure we are both compliant and ethical in our business practices,” a loanDepot spokesperson told HousingWire. “What makes loanDepot unique is our combination of the best technology and our highly-skilled lending professionals to provide the high-touch and high-tech experience that the customer wants in order to finance the home of their dreams.”

It explained that it does, in fact, exclude wholesale loans from its company retention efforts. What’s more, the company said it even notifies the broker when a payoff notification is received.

“Specific to our wholesale division, we have designed our loan origination system and our loan numbers to be able to easily differentiate wholesale loans from retail loans,” loanDepot’s spokerperson said. “We then specifically exclude wholesale loans from all company retention efforts.”

“Additionally, when a payoff notification is received we notify our broker partner so they have the opportunity to recapture that client and retain the relationship, versus the client going to another broker or lender,” they continued. “Finally, we also track and send out active MLS listings on properties and clients we have closed to our broker partners so that they may get out ahead of any possible new mortgage transaction that customer may be conducting, and work with the client on their financing needs to maintain that relationship.”

And loanDepot isn’t the only wholesale lender standing up to BRAWL. The top U.S. lender of 2016, measured by HMDA loan volume on purchases and refis, said the whole concept of BRAWL is an embarrassing attempt to obscure another, harsher reality.

“The entire premise of ‘BRAWL’ – that some wholesale lenders are ‘safe’ to sell to while others are not – is flawed,” Quicken Loans President and Chief Operating Officer Bob Walters told HousingWire. “Those lenders that are considered ‘safe’ are generally those that immediately sell large portions of their servicing rights to companies that have powerful origination and retention capabilities.

“Contrast that to a company like Quicken Loans Mortgage Services that maintains control of its servicing and commits to its partners that it won’t solicit their clients for a substantial period of time,” Walters said. “‘BRAWL’ is a misguided attempt to obscure the reality that brokers face a much greater retention danger by using wholesalers that dump clients into the arms of servicers that specifically price their servicing with a strong retention focus in mind instead of wholesalers who maintain control.”

ALL PARTIES SAY BROKERS ARE TOP PRIORITY

loanDepot stressed that its broker community and their customers are a top priority for the company.

“Our partnership with the broker community and their customers is a top priority,” the spokesperson told HousingWire. “It is crucial that correct information is provided to existing and potential brokers. loanDepot takes measures through established policies and procedures to ensure our broker partners get as many deals back as possible.”

In fact, loanDepot claimed the information BRAWL has put out by naming them on the list of “bad lenders” comes from a vocal minority giving incorrect information.

“There is a very vocal minority giving incorrect details about loanDepot’s policies on customer retention policies specific to the wholesale business, many of whom have not done business with the loanDepot and do not know the company’s practices,” the spokesperson said.

But BRAWL continues to fight back against their list of “bad lenders.” The movement said it won’t rest until it sees meaningful and permanent change.

“The support for BRAWL from mortgage brokers and independent loan originators is far greater than anyone expected, over ten thousand of them supporting this movement in only a couple months,” Garden State Home Loans President Anthony Casa told HousingWire. “If these lenders are serious about making real changes to accommodate the practices that we want stopped; we are asking them to come sit down with us and we can discuss the changes we need made to support and protect mortgage brokers and independent loan originators.”

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